CSDDD postponed, sustainability postponed? Why companies need to act now!

The recent decision to postpone the application of key EU sustainability regulations - including the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) - by one year to 2028 raises fundamental questions for companies. Instead of planning security and stable framework conditions for investments in sustainable endeavors, companies are experiencing growing regulatory uncertainty. At the same time, US policy is increasingly moving away from ESG regulations. What risks do such delays entail - and how do they affect companies that invest in sustainability at an early stage?

In recent years, the European Union has launched a large number of regulatory initiatives to make companies more accountable - particularly in the areas of human rights, environmental and climate protection along global supply chains. Laws such as the CSDDD and the CSRD should create clear rules on the conditions under which economic activity can take place in a sustainable and social world. They aim to make sustainability a binding corporate duty and set clear liability and reporting obligations. However, a different picture is now emerging: the political will to drive this transformation forward with vigor has faltered.

The development of the CSDDD can be used as an example of political hesitation. It was supposed to apply from 2027, but its application was officially postponed until 2028. At the same time, the requirements were significantly weakened: the group of affected companies was reduced, responsibility was limited to direct suppliers and central liability regulations were watered down or completely removed at the last minute.

These developments are not isolated to the European context. Strong headwinds have recently developed in the USA in particular. This international dynamic is having repercussions on European decision-making processes: Concerns about competitive disadvantages and a

The decline in investment means that key sustainability initiatives are increasingly being called into question.

The ongoing uncertainty in European sustainability regulation is a growing strategic challenge for companies. The postponement and dilution of key guidelines mean that investment decisions in sustainable projects are difficult to calculate. Those who invested in sustainability at an early stage often did so on the assumption that they were not only future-proof, but also compliant with the law. If the regulatory framework is then changed or even softened at short notice, it is precisely these companies that fall behind - financially, strategically and competitively.

In addition, the increasing lack of clarity leads to considerable operational and legal risks. The standardization of due diligence and reporting obligations is increasingly giving way to national fragmentation. This increases the administrative burden and makes it more difficult for companies - especially those with international value chains - to establish reliable and uniform compliance structures. This not only results in costs, but also reputational risks, particularly vis-à-vis investors, business partners and the critical public, who continue to have high expectations of corporate responsibility.

The postponement of key sustainability regulations such as the CSDDD does not provide any relief, but rather increases uncertainty. Companies that invest in responsibility at an early stage are increasingly exposed to strategic risk as a result - while those that wait and see may even appear to have an advantage in the short term. But it is precisely now that clarity, orientation and courageous decisions are needed.

Now is the time to see which companies are really serious about sustainability: Those who continue to invest, audit and report even under uncertain political conditions are demonstrating a genuine desire to do business responsibly and are setting themselves apart from the competition. What are the reasons for continuing to invest in sustainability in this phase?

• Companies with clear, voluntary sustainability standards and initiatives become more credible for investors, business partners and the critical public.
• Those who make bold decisions now and invest in ESG processes can secure a strategic advantage through credible responsibility - regardless of postponed deadlines and watered-down requirements.
• The fragmentation and uncertainty in regulation make orientation and corporate governance even more urgent from a sustainability perspective: proactive companies will position themselves as reliable and future-proof in the long term.

As experienced experts in sustainability regulation, risk management and reporting, CURENTIS AG supports companies in remaining strategically capable of acting despite political uncertainties. The postponement of the CSDDD does not change the relevance of sustainable corporate governance - in fact, it makes clear orientation even more urgent.

We analyze your individual risk situation, identify areas for action and work with you to develop tailor-made solutions for integrating ESG requirements into your processes. In this way, sustainability becomes a real competitive advantage - not a risk.

To the author:

Artur Kehrein has been a Senior Consultant at CURENTIS AG since 2022. He has many years of experience in risk management and reporting. He has also specialized in sustainable/green finance.